June 30 Filing Deadlines Approaching: Noting The Amendments Made To The Bermuda Investment Funds Act 2006



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All authorised and registered Bermuda investments funds having a financial year end at December 31 should be finalising their annual filings with the Bermuda Monetary Authority, which are due by June 30.
Bermuda Finance and Banking
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All authorised and registered Bermuda investments funds having a financial year end at December 31 should be finalising their annual filings with the Bermuda Monetary Authority, which are due by June 30.

Changes made to the Investment Funds legislation in September 2023 introduced late fees, as well as options for filing extension requests, where appropriate. If extensions are needed, now is the time to make the request and our team is on hand to assist.

Amendments to the Investment Funds Act

The Bermuda Monetary Authority (the "BMA") is focused on investor protection and has made recent enhancements to the investment funds regime in Bermuda. When the Investment Funds Amendment Act 2023, Investment Fund Amendment Rules 2023, and Investment Fund Offering Document Amendment Rules 2023 ("Fund Rules") were passed in September 2023, it did not make a lot of headlines. Most of the changes introduced had the effect of clarifying and harmonising definitions and requirements within the Investment Funds Act 2006, as amended (the "Amended IFA"). While the overall result was a more streamlined statute, there were a few important changes to note.

More Flexible Filing Deadlines

As those in the industry will be aware, the annual certification filing for investment funds authorised or registered in Bermuda are due to be filed with the BMA within six months of the financial year end of the fund. With so many funds electing to have a financial year end at December 31, the historical trend has been for the BMA to receive a flurry of annual filings just before the June 30 deadline each year. One collateral result of this is that professional fund administrators, who are generally tasked with annual filings, have a very busy time period in June—a time when the BMA is also receiving many other annual filings. The Amended IFA introduces a new option for a filing extension request if, for reasons outside of the operator's control, a fund is not able to adhere to the required filing deadline. If an extension is needed, a fund can make a request ahead of time and provide the BMA with the reason for the extension request and the proposed timeline for the filing to be completed, which can be granted on a month-by-month basis, up to three additional months in total.

Be Aware of Late Fees

While the BMA has traditionally had broad discretion to impose penalties on a case-by-case basis, the Amended IFA introduces a new and specific late fee that will be payable for non-compliance with statutory and regulatory requirements, which specifically captures adherence to annual filing deadlines. While the late fee can vary depending on the nature of the act of non-compliance, the maximum late fee in 2024 is capped at $1,000 per incident.

The Fund Rules also introduced an express requirement for funds to publish an updated offering document without delay when there has been a material change to it, or otherwise to make copies of the updated offering document available to participants.

Enhanced Powers of Intervention

Historically, the BMA had powers and discretion to give orders and directions, however these have been only in respect of specific identified sections of the IFA. Under the Amended IFA, the powers are broader, providing that the BMA may give directions "at any time if it appears to the Authority that an investment fund is in breach of any provision of this Act or rules applicable to it", rather than in a defined set of circumstances. This allows the BMA to intervene in any situation where it deems it to be desirable for safeguarding the interests of investors.

What to Expect

Overall, in light of the Amended IFA, fund stakeholders in Bermuda can expect a more streamlined and efficient filing season, with clear parameters of what is expected and what the consequence will be for non-compliance. We would encourage you to get apply early if any requests for filing extensions may be required.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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